Should iMessage be making telcos nervous?

With around two trillion text messages sent in America alone every year, SMS text messaging is the most widely used data application in the world and the number two use of mobile phones - the first being to check the time. It's also a cash cow for telecommunications companies with the average charge worldwide of around US$0.10 per message for data that essentially costs the telco nothing to transmit because it is sent on the control channel - a small part of radio bandwidth that is used to send information between the tower and phone about call setups. Apple's iOS 5 update - if you can get it installed - sees the addition of a new iMessage app that could have telcos nervous as it allows text messages to be sent for next to nothing.

iMessage works in much the same way as the BlackBerry Messenger (BBM) application that allows BlackBerry users to send secure messages of unlimited length, along with photos and videos, amongst themselves over an internet connection. Like BBM, iMessage also supports delivery and read receipts, group chats and will only work on like devices - iPhones, iPads and iPod touch - over either a Wi-Fi network or 3G using your phone's data plan.

While BBM was one of the major selling points for BlackBerry devices, Research In Motion (RIM) failed to capitalize on its popularity by expanding into cross platform communication capability early on. This means users of BBM and iMessage have to resort to a standard SMS when messaging someone not using a like device. So why does iMessage potentially pose more of a threat to a telco's bottom line than third party messaging apps or BBM?

The answer is the popularity of the iPhone - which shows no sign of abating and sat at 19 percent worldwide market share in Q2 2011, overtaking the BlackBerry - and the seamless nature with which iMessage is integrated into iOS 5.

Upon upgrading to iOS 5 (which took me a couple of attempts before success was achieved), iMessage was turned on by default in Settings/Messages. This means that any SMS sent to another iOS 5 device with iMessage enabled will be sent over Wi-Fi or 3G for much less than the cost of a standard SMS.

There's no need to download a third party app and worry about whether the receiver also has that app installed and running when you attempt to send the SMS because the system will revert back to a standard SMS if there's no iMessage compatibility on the receiving device. In other words, the user doesn't have to change the way they send text messages to use iMessage and save on SMS costs. In fact, in our brief tests we found that texts sent via iMessage arrived faster than a regular SMS - one second as opposed to two.

While we can see Apple bringing iMessage support to the desktop with an app for OS X Lion, it's less easy to predict whether it would allow cross platform compatibility with other mobile operating systems, such as Android, which claimed 43 percent worldwide market share in Q2 2011.

While the telcos are probably already concerned about iMessage even though Apple devices account for only around five percent of total text message sent in the U.S., they're likely to be even more concerned to hear that Samsung and Google are reportedly working on a similar service for Android phones, while Microsoft is also believed to be developing its own instant messaging system for Windows Phone. Guess that's what happens when you charge what has been calculated as a 4,090 percent markup for a service.